𝗧𝗵𝗲 𝗔𝗿𝗯𝗶𝘁𝗿𝗮𝘁𝗶𝗼𝗻 𝘁𝗿𝗶𝗯𝘂𝗻𝗮𝗹 𝗰𝗮𝗻𝗻𝗼𝘁 𝗮𝘄𝗮𝗿𝗱 𝗶𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗶𝗳 𝘁𝗵𝗲 𝗽𝗮𝗿𝘁𝗶𝗲𝘀 𝗵𝗮𝘃𝗲 𝗮𝗴𝗿𝗲𝗲𝗱 𝗼𝘁𝗵𝗲𝗿𝘄𝗶𝘀𝗲. – 𝗦𝘂𝗽𝗿𝗲𝗺𝗲 𝗖𝗼𝘂𝗿𝘁
Case Title: _Delhi Airport Metro Express Pvt. Ltd. v Delhi Metro Rail Corporation_, Civil Appeal No. 3657 of 2022 arising out of S.L.P. (C) No. 4901 of 2022., Dated: 05.05.2022
The Division Bench of Justice L. Nageshwar Rao and Justice B.R. Gavai held that when the parties have an agreement between themselves that governs the issue of interest, the arbitrator would lose its discretion and will be guided by the agreement between the parties.
Facts
The parties entered into a Concession Agreement wherein the respondent was to carry out certain civil works. A dispute arose between the parties which were referred to arbitration. The arbitrator partly allowed the claims of the appellant. The award was affirmed by the Supreme Court.
The appellant filed for the execution of the award and sought future interest on the entire amount of the sum awarded by the arbitrator. The executing court rejected the contention of the appellant on the ground that the arbitrator allowed future interest only on the principal amount. Aggrieved by the order of the executing court rejecting its claim for future interest on the amount of interest awarded, the appellant preferred an appeal before the Supreme Court.
Sequitur by the Court:
The Court reiterated that the arbitrator is empowered to allow future interest on the pendente lite interest. The Court held that the sum of the award would include both the principal amount and the interest component for the purpose of future interest. However, this power of the arbitrator is subject to an agreement between the parties.
The Court held that party-autonomy is the cornerstone of the A&C Act and the discretion available with the arbitrator would cease to have effect if the parties have exercised their autonomy under Section 31(7)(a) of the Act.
The Court further held that the power vested in the arbitrator is a discretionary power, therefore, the arbitrator is not bound to award interest. The arbitrator can allow interest on any component for the entire or any period thereof or it may not award any interest at all. – Live Law
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